Asia Business: The Week in Review - 2003-12-08

Banking-fraud has been uncovered in Indonesia's fourth largest bank and Thailand reaps the benefits of its "early harvest" trade deal with China signed earlier this year.

The state-owned Bank Rakyat in Indonesia says it has uncovered lending fraud that caused losses of at least $34 million. The fraud apparently involved loans backed by fictitious deposits from three banking branches to local companies.

David Green is the country director for the Asian Development Bank in Jakarta. He says the problem hurts the reputation of Indonesia's banking system, in part because it follows revelations a few months ago of a 200 million dollar insurance scandal at another bank.

"This is not coming at a good time for Indonesia's picture to the world," says Mr. Green. "On the other hand the fact that we find these things out means that somebody somewhere is looking at things… the first step is uncovering them."

Mr. Green, however, says that while corruption is still a problem in Indonesia's financial institutions, most banks are now in better shape than before the Asian financial crisis of 1997.

In Thailand, exports hit a three-year high in October and the government credits new free-trade agreements with China and India with boosting trade. Exports were up by more than 15 percent in the first 10 months of 2003, compared with the same period last year.

South Korea's trade surplus jumped 13 percent in November, to $2.8 billion. That is its highest level in five years.

The Ministry of Industry and Energy says the rise is due mostly to increases in foreign demand for South Korean products. Semiconductors, automobiles, wireless telecom equipment and computers led growth in overseas shipments.